Leading the region
The Warsaw Stock Exchange fared better than competitors in a slow first quarter while shoring up revenues with a new commodities exchange. Now it is gearing up for a trading-platform upgrade later this year
The Warsaw Stock Exchange maintains a tight grip on its leadership position in the Central and Eastern Europe (CEE) region, after it fared better than competitors and looks set to benefit from new commodities trading capabilities and a partnership with NYSE Euronext.
Net profits reached zł.33.5 million for the first quarter, marking a 13.2 percent drop in comparison with a year earlier. However, the figure was 33.6 percent higher than the WSE’s profits in the fourth quarter of 2011.
The exchange put the y/y fall in profits down to lower trade turnover, which was not limited to the Warsaw Stock Exchange alone. According to the World Federation of Exchanges, turnover within the Europe, Middle East and Africa region (EMEA) dropped 21 percent overall. For the Warsaw Stock Exchange, the drop was somewhat less drastic, at 16 percent.
Ludwik Sobolewski, president of the Warsaw Stock Exchange, said the company was “satisfied” with the results, taking into context the insecurity and volatility on capital markets around the world.
Among major stock markets in Europe, only Deutsche Börse saw a lower drop in turnover, at 12 percent. NYSE Euronext (which includes the Paris bourse) and London Stock Exchange Group saw drops in turnover of 25 percent and 18 percent over the quarter respectively.
The WSE’s main rival in the region, the Vienna Stock Exchange, saw turnover plummet by 40 percent.
In terms of the share of turnover in the region, the Warsaw Stock Exchange dominated, taking a full 54 percent over the first quarter of the year. Vienna saw 23 percent, while its partner exchanges in Budapest and Prague took 11 and 10 percent respectively (see chart).
So far this year the WSE’s biggest move was its takeover in March of the Polish Power Exchange (TGE). Though it pushed up operating costs for the first quarter, which rose by nearly 13 percent over Q1 2011, WSE officials were confident that its diversification into commodities trading would pay off.
TGE’s March revenues accounted for 10 percent of the WSE’s consolidated quarterly revenues. According to Mr Sobolewski, if TGE’s full-quarter income were included, it would have accounted for some 23 percent of the WSE’s revenues. Over the whole year, Mr Sobolewski said he expected TGE to account for about a 20 percent share of the WSE’s revenues, depending on activity in the capital market.
New platform, cooperation with NYSE
On November 2 the WSE will go live with its new trading platform, which it is implementing in cooperation with NYSE Euronext. The system will be the same as the one that is used on the NYSE, company officials said, and is expected to be a significant upgrade. Mr Sobolewski called its implementation “easily the biggest event of the year” for the stock exchange.
Mr Sobolewski also said that the WSE’s partnership with NYSE Euronext will be “richer than involving just technology.” When pressed for details, he said that one of the initiatives he could mention was cooperation along the lines of information distribution – NYSE Euronext would help WSE plug in to systems that would allow more investors to find information on shares listed in Warsaw.